UNIVERSAL ROBINA CORPORATION
BRIEF DESCRIPTION
Universal Robina Corporation (URC) is one of the largest branded consumer food and
beverage product companies in the Philippines. The company has a significant and growing
presence in the ASEAN and Oceania markets. It is among the Philippines' pioneers in the
industry. It has been operating for over 50 years since Mr. John Gokongwei, Jr. established
Universal Corn Products Inc. in 1954, a cornstarch manufacturing plant in Pasig City.
URC is engaged in an array of food-related businesses, including the production and
distribution of branded consumer snack foods and beverages; commodities such as sugar and
flour; and agro-industrial businesses mainly hogs, animal feed, and other related products.
URC has established itself to be the trailblazer in manufacturing through best-in-class
technologies and processes. It has unswervingly showcased its innovation and excellence
through groundbreaking products to the ASEAN market and wide distribution networks in both
modern and traditional channels.
Mr. John envisioned URC to become a premiere food and beverage player across the
ASEAN region with strong market position. URC products are also exported to other markets
like the US, Europe, Japan, Korea, the Middle East, and also in West African countries like
Ghana, and Nigeria through our URC Thailand office. In 2014 URC started its venture to
developed markets such as New Zealand and Australia which is now called, URC Oceania.
URC has built three strong regional brands over the years— Jack 'n Jill for snack foods,
C2 Cool and Clean for ready-to-drink tea, and Great Taste for coffee. These brands are becoming
popular across the ASEAN region. We also have premium brands from SBA through their snack
foods segment such as Thins, Cheezels, CC’s, Kettle and Natural Chip, Co., and Griffin’s
through their high quality sweet biscuits and wide range of healthy wrapped snacks called Nice
and Natural.
URC's key to success has been attributed to building strong brands, robust product
innovation pipeline, and world-class manufacturing and supply chain capabilities. URC will
continue to transform and delight consumers in line with the changing competitive dynamics,
and growth opportunities in Asia.
COMPANY HISTORY
Universal Robina Corporation (URC) traces its beginnings in 1954. At that time, Mr.
John Gokongwei, Jr. did well as a trader. He had learned the trade when his father died before
the Second World War. Mr. John worked hard during the conflict and postwar years, in order to
prosper. However, while he thrived, he carefully examined his company and correctly predicted
that trading would remain a low-margin business.
Mr. John decided to construct a corn milling plant to produce glucose and cornstarch. He
named it Universal Corn Products (UCP), the first linchpin of the company that became the URC
we know today.
Business was good for a time; it’s producing a commodity that consumers could easily
access, until similar multinational companies in the country became hurdles. That’s why; Mr.
John is continuously working with an eye towards the future. To stay ahead of the game, Mr.
John had to diversify by producing and marketing his own branded consumer foods. He wanted
to build the first 'local' multinational company (MNC), borne out of best practices.
Thus, Consolidated Food Corporation was born in 1961. Its 'home run' and pioneer
product is Blend 45, the first locally-manufactured coffee blend, dubbed as the "Pinoy coffee".
Blend 45 became the largest-selling coffee brand in the market, beating market Café Puro and
Nescafé Panned chocolate Nips came after coffee. It’s a Filipino childhood staple. In 1963,
Robina Farms started its operations of poultry products. This was also the beginning of the
vertical integration of the Gokongwei businesses. In the late ‘60s, Robichem Laboratories were
built. Its main purpose is to provide veterinary needs to farm businesses. In the latter part of the
‘70s, Robina Farms expanded when it entered the hogs business.
In 1966, Universal Robina Corporation was established. It pioneered the salty snacks
industry through Chiz Curls, Chippy, and Potato Chips, under the Jack 'n Jill brand. Other snack
products followed, as the company successfully introduced market leaders like Pretzels, Piattos,
and Maxx.
In the coming decades, URC had more acquisitions and developments. In the early 1970s,
the family entered the commodities business through the formation of Continental Milling
Corporation, for flour milling and production. The late 1980s brought the acquisition of three
sugar mills and refineries, under URC Sugar. These two businesses provided stable cash flows,
and allowed for further vertical integration in the supply chain, to help URC weather any
volatility in the cyclical commodities market. In line with this strategy, during the late ‘90s URC
entered the plastics business, through URC Packaging.
While the businesses became more diversified, the companies were slowly integrated in
order to streamline and minimize costs. In 2005, the present structure of the group was
completed. All the different companies are now organized under the Universal Robina
Corporation umbrella, divided into three focused groups:
the Branded Consumer Food Group, comprised of BCFG Domestic (including
packaging) and International;
the Agro-Industrial Group, comprised of Universal Corn Products, Robina Farms, and
Robichem;
and the Commodities Group, for sugar and flour divisions
MISSION, VISION AND CORE VALUES
Mission
Universal Robina Corporation (URC) is one of the largest branded food product
companies in the Philippines and has a growing presence in other ASEAN markets.
Vision
URC's vision is to be the best Philippine food and beverage company, with a powerful
presence throughout the ASEAN region, carrying a wide portfolio of delightful brands of
exceptional quality and value, equipped with efficient systems and motivated people. We are
committed in making lives a truly fun experience.
Values
Passion to Win: We build organizational capability by being entrepreneurial and proactive,
driven by a sense of urgency and purpose. We continuously challenge ourselves to deliver world-
class brands and consistently rally our people to strive for excellence.
Dynamism: We cultivate a culture of innovation and productive working relationships. We
continuously find ways to improve organizational and people capabilities to meet constantly
challenging consumer needs.
Integrity: We are guided by transparency, ethics, and fairness. We build the business with honor
and are committed to good governance. Our processes and products meet the highest standards.
We are credible in our dealings with both internal and external stakeholders.
Courage: We seize opportunities in building long-term, sustainable businesses. We make tough
people and business decisions to ensure competitive advantage.
COMPANY STRUCTURE
BUSINESS OPERATIONS
Universal Robina Corporation
(URC), the "first Philippine
multinational", has managed to
become one of the leading
snackfoods and beverage
companies in the ASEAN markets.
Most recently, URC has expanded
its operations to developed
markets such as New Zealand and
Australia by acquiring the Griffin's
Food Company, a leading snacks
player in New Zealand.
URC is known for its wide-
ranging food and beverage
businesses which includes branded
consumer foods; flour and pasta;
sugar; renewable energy through
bio-ethanol and biomass
cogeneration businesses (under the
Sugar Group); hog farm and animal feed.
REPUTATION
Universal Robina Corp (URC) has been voted as the "Best Managed Consumer Company in
Asia" and its head, Lance Gokongwei, Best CEO for the Philippines.
The company was also ranked among the top ten in the country awards in terms of investor
relations, dividend payment, corporate governance and best managed as a public corporation
by leading business magazine Finance Asia.
As Asia's best, URC had made it
for a second year in a row.
With these awards, URC joins
the ranks of Asia's biggest and
most trusted conglomerates,
including China Telecom and
Hong Kong's Hutchison
Whampoa.
Finance Asia surveyed over 250
portfolio managers and analysts.
They were asked to choose listed companies in Asia that they believe are the best managed, with
the best senior executives and best policies around dividend payments and other corporate
programs.
URC, one of the Philippines' biggest and most diversified food firms, was recently conferred the
"Company of the Year" award by the Fund Managers Association of the Philippines (FMAP),
after topping the group's poll of banks and brokers.
FMAP said URC was given the award "in line with our advocacy of promoting good corporate
governance and minority shareholders protection among listed companies".
Over three years, URC's stock has grown by 264 percent.
URC has been steadily expanding its presence in the Asia-Pacific, as it seeks to grow its
international business.
The company has acquired New Zealand's leading snacks food manufacturer, Griffin Foods, for
about NZ$700 million (P24 billion).
STRENGTHS AND WEAKNESSES
Strengths:
Agro-Industrial Segment/Group – URC’s market for AIG is highly fragmented, very
competitive, cyclical and principally domestic. URC is focused and known in providing
Total Agri-Solution and farm management expertise.
Distribution and Sales – URC developed an effective nationwide distribution chain and
sales network which gives them their competitive advantage. URC sells its branded food
products primarily to supermarkets, as well as directly to top wholesalers, large
convenience stores, large scaling trading companies and regional distributors, which in
turn sell its products to other small retails and down line markets.
Marketing and Innovation – URC’s emphasis on marketing, product innovation and
quality and strong brand equity has played a key role in its success in achieving leading
market shares in different categories where it competes. In particular, URC launched
“Jack ‘n Jill” as a master umbrella brand for all its snack food products in order to
enhance customer recognition. URC devotes significant expenditures to support
advertising and branding to differentiate its products and further expand market share
both in the Philippines and in its overseas markets, including funding for advertising
campaigns such as television commercials and radio and print advertisements, as well as
trade and consumer promotions.
Good Employer-Employee Relationship – URC believes that good labor relations
generally exist throughout their subsidiaries and operating divisions and that’s one of the
factors why they are named “Best Managed Consumer Company in Asia”.
Weaknesses:
Financial Market - URC has foreign exchange exposure primarily associated with
fluctuations in the value of the Philippine Peso against the U.S. dollar and other foreign
currencies. Majority of URC’s revenues is denominated in Pesos, while certain of its
expenses, including debt services and raw material costs, are denominated in U.S. dollars
or based on prices determined in U.S. dollars. In addition, the majority of URC’s debt is
denominated in foreign currencies.
Competition - URC and its subsidiaries face competition in all segments of its
businesses both in the Philippine market and in international markets where it operates.
The Philippine food industry in general is highly competitive.
OPPORTUNITIES AND THREATS
Opportunities:
Threats:
Raw Materials - URC’s production operations depend upon obtaining adequate supplies
of raw materials on a timely basis. In addition, its profitability depends in part on the
prices of raw materials since a portion of URC’s raw material requirements is imported
including packaging materials.
Food Safety Concerns – URC’s business could be adversely affected by the actual or
alleged contamination or deterioration of certain of its flagship products, or of similar
products produced by third parties.
Weather and Catastrophe - Severe weather condition may have an impact on some
aspects of URC’s business, such as its sugar cane milling operations due to reduced
availability of sugar cane. Weather condition may also affect URC’s ability to obtain raw
materials and the cost of those raw materials. Moreover, the Philippines have experienced
a number of major natural catastrophes over the years including typhoons, droughts,
volcanic eruptions, and earthquakes.
UNIVERSAL ROBINA CORPORATION
For the year ended December 31, 2017
SAN MIGUEL FOOD AND BEVERAGE INCORPORATED
For the year ended December 31, 2017
DEL MONTE PACIFIC LIMITED
For the fiscal year ended April For the fiscal year ended April 30, 2017
UNIVERSAL ROBINA CORPORATION
For the year ended September 30, 2016
SAN MIGUEL FOOD AND BEVERAGE INCORPORATED
For the year ended December 31, 2016
DEL MONTE PACIFIC LIMITED
For the year ended April 30, 2016
UNIVERSAL ROBINA CORPORATION
For the year ended September 30, 2015
SAN MIGUEL FOOD AND BEVERAGE INCORPORATED
For the year ended December 31, 2015
DEL MONTE PACIFIC LIMITED
For the year ended April 30, 2015
FINANCIAL
STATEMENTS
SUMMARY
FINANCIAL
RATIOS
UNIVERSAL ROBINA CORPORATION
2017
SAN MIGUEL FOOD AND BEVERAGE INCORPORATED
2017
DEL MONTE PACIFIC LIMITED
2017
UNIVERSAL ROBINA CORPORATION
2016
SAN MIGUEL FOOD AND BEVERAGE INCORPORATED
2016
DEL MONTE PACIFIC LIMITED
2016
UNIVERSAL ROBINA CORPORATION
2015
SAN MIGUEL FOOD AND BEVERAGE INCORPORATED
2015
DEL MONTE PACIFIC LIMITED
2015
CONCLUSION
Universal Robina Corporation operates its food business through operating divisions and
wholly-owned or majority owned subsidiaries that are organized into three core business
segments: branded consumer foods, agro-industrial products and commodity food products. The
Company has a strong brand portfolio created and supported through continuous product
innovation, extensive marketing and experienced management. Its brands are household names
in the Philippines and a growing number of consumers across Asia are purchasing the
Company’s branded consumer food products.
URC’s overall financial condition improved in 2015. The company’s liquidity ratios
reveal that the company was able to meet its short term obligations.
URC’s solvency improved in 2017 despite the issues that they faced with regards to their
business in Vietnam plus the trade war happening in America. URC’s Times Interest Earned
improved tremendously by 5 times from 7 times in 2016 to 12 times in 2017. Furthermore, the
company’s debt to total asset ratio favorably decreased by 6% from 39% in 2016 to 33% in 2017.
The company’s overall profitability improved in 2016. It is evident in the company’s 2%
increase in profit margin from 32% in 2015 to 30% in 2015.
The strong growth in the company’s full year profit was driven by its domestic branded
consumer food group (BCFG), which more than offset the weak performance of the commodity
food group. The company is also benefiting from its successful expansion internationally.
RECOMMENDATIONS
Universal Robina Corporation is a consumer food, animal feed and agricultural product
manufacturing company. The company undertakes manufacturing and distribution of branded
consumer foods, hogs and day-old chicks, animal and fish feeds, glucose and veterinary
compounds as well as it operates flour milling, sugar milling and refining and makes plastic film
for packaging consumer products. It also offers coffee, flour, feed, meat, bakery, beverages,
biscuits, candy, chocolate, noodles, and easy-to-drink products. The company operates in
Philippines, China, Thailand, Malaysia, Vietnam, Singapore, Hong Kong and Indonesia
internationally.
Cost of sales slightly increased due to increase in sales. It would be highly beneficial if
the company would monitor and manage this efficiently. By tapering this down, the company
may be able to increase its profits.
The stronger peso’s effect on the export industry is evident in the 1,629.1% increase in
foreign exchange loss in 2016. It is highly recommended that the company would consider its
effect on the company’s net income. By prioritizing the domestic market and by strategically
managing the export business, the losses may be reduced. The sales in Thailand contracted in
2016; this was largely due to the floods experienced near the end of 2015. Due to the floods in
late 2015, spending on consumer staples is higher than on discretionary products. It is highly
recommended that the company to launch other products such as confectionaries and to increase
its budget in adverting and marketing. Through its market leadership and commitment to
excellence the company is expected to play in the ASEAN growth story.
WILL I INVEST?
URC is and has been a major part of every Filipino’s life. Who could forget Cloud 9,
Nips, Big Bang and Chooey Choco? We loved them when we were just little kids and we still
love them until now. What about Mr. Chips, Piattos, V-Cut, Chippy, Chiz Curls, Nova and
Roller Coaster and other Jack ‘n Jill chips? The little candies like Maxx, Dynamite, X.O. and
Star Pops lollipops will always be part of our busy life. Those products mentioned are only
among the thousands of products produced by URC.
To sum up, here are the best reasons why we should invest in URC:
- Food is king. URC is the market leader in numerous snack food categories.
- URC’s corporate life is 50 years old already and I’m sure it will be here for another 50 or
more.
- URC’s products are distributed to approximately 120,000 outlets in the country.
- They also export their products which mean more income stream.
- Stock price is not that expensive compared to other big companies. I know stock prices
are not so relevant to the real value of a company but for a giant company like URC, I
think it’s safe to say it’s perfect for long term.
- Their stocks are not typically cyclical and seasonal.
